AS the Kudu Gas and Xaris Energy power projects continue to take centre stage a cold war is currently being fought at Nampower pitting the parastatal’s board chairperson, Maria Nakale against her fellow board members after she allegedly went behind her colleagues’ backs to the Ministers of Mines and Energy and Public Enterprises, Confidente can reveal.
Confidente can also reveal that the Nampower board has admitted to Government that mistakes were made during the awarding of the 230-250MW power plant project to the controversial Xaris Energy as the preferred bidder.
Confidente has learnt that Nakale by all accounts appears in favour of the Xaris Energy power project while other Nampower board members that include Penda Kiiyala, Pedro Maritz, Patty Karuaihe-Martin, Selma-Penna Utonih and Advocate Albert Boesak appear to be considering other options beyond Xaris.
Confidente also has it on good authority that although Government has decided to proceed with the Kudu Gas project, there are some high ranking Government officials who stand to benefit from the Xaris Energy deal who are still pressurising Nampower to go ahead with the Xaris project.
Confidente has in its possession a letter written on June 6 by Nakale to the Minister of Mines and Energy, Obeth Kandjoze which was also copied to Leon Jooste, the Minister of Public Enterprises where she appears to be ratting out her fellow board members.
Confidente has it on good authority that Nakale wrote the letter without the knowledge of her colleagues on the board.
Nakale in the letter informs the two ministers that she was not ‘comfortable’ to sign a letter the Nampower board would write four days later briefing Kandjoze on the status of the Arandis Power/ Nampower court case.
“This letter serves to provide an explanation on why I did not sign the letter addressed to you on the case of Arandis Power/ Nampower and others, which was written by the Board of Directors of Nampower as per Honourable Minister’s request at our meeting of May 30 2016. Whilst, I agree with most of the issues raised in the letter of June 2016, I do not feel comfortable with the views on the capacity requirements as per the tender submission as expressed under (ii) of the letter.
“It is very unfortunate that the 250MW project received negative publicity, from different stakeholders, which started in April 2015 and henceforth attracted different subjective views ever since,” Nakale wrote in part.
Nakale allegedly spills more on her colleagues in the board by further writing that she was uncomfortable to put her signature on the letter signed by the rest of the other board members because ‘her interpretation of the initial evaluation report as prepared by KPMG on the capacity of power generation by Xaris was different from the one the Nampower board was now outlining to the Minister.’
“…Xaris has also offered a compliant 250MW scheme using five gas turbines with a reduction of US$25 million in the capital cost. It was further stated on page 53 of the same report that Xaris has stated that a power station comprising six gas turbines would provide a tariff, which is six percent cheaper than one utilising five gas turbines. Although that appears reasonable it was not compliant because the capacity is greater than the maximum allowed by the RFP. The report went on to state that the Xaris bid includes a methodology to recalculate the tariff offer for a five gas turbine plant and is therefore considered compliant. The bid evaluation has been conducted on the basis of a 250MW capacity plant with six gas turbines.
“…At the time of adjudicating the tender, it was clarified why Xaris Energy referred to the 300MW in its bid. My understanding was that the RFP required the plant to be converted to closed cycle gas (CCGT) in future. In order to comply with that requirement Xaris Energy submitted an offer for six turbines of 50MW. Therefore, their inclusion of the sixth turbine and mentioning of the 300MW in their bid document was based on a solution that was in line with the RFP,” she said.
Nakale also left her colleagues high and dry when she wrote that none of her board members were ever involved in the initial evaluation process of the tender and appears to allegedly give an impression that her colleagues lack the knowledge to give an opinion on Xaris Energy. “The views expressed at the meeting when the board identified Xaris Energy as the preferred bidder in 2014 still remained relevant to me. I am not convinced by the current views expressed on the issue of capacity because none of the individuals who concluded as such was intimately involved with the actual evaluation process of this complex tender. It is therefore on the basis that I decided not to sign the letter Honourable Minister requested all board members to sign,” Nakale concluded.
Confidente has also in its possession the letter written June 10 by the Nampower board to Kandjoze which Nakale didn’t sign.
According to the letter, Xaris Energy submitted a tender for a six turbine power plant correlating to a capacity of 298MW and as an alternative the company had also offered a five turbine plant corresponding with a capacity of 231MW and a capital reduction of US$25 million (N$350 million) reflecting a slightly higher levelled electricity cost and therefore had failed to meet Nampower’s requirements. “In accordance with the Nampower RFP requirements, tenderers were obliged to submit tenders that conform to the requirements of the RFP (plant with a net electricity of 230-250MW) and are only permitted to deviate from the requirements of the RFP by offering an alternative to the main offer… Notwithstanding the fact that the board has the overall accountability regarding the decisions of the company, the issue of validity was never presented to the board, hence the board did not have any prior knowledge of the issues. “Whereas on the power station capacity, again the board was brought under the impression that Xaris provided a five machine solution in their main bid in compliance with the capacity of 250MW but they also offered as an alternative a sixth machine in case Nampower in future may wish to consider it. It was clarified by management that Xaris submitted six machines in their main bid with an alternative of five machines and even if the version of five machines is to be deemed acceptable, Xaris will still not be responsive because their main bid was six machines which did not comply with the RFP.”
The Nampower board also admits in its letter to Kandjoze that mistakes were made in the tender process and as it hinted that the power project tender might be cancelled by the High Court.
“As a result of the foregoing, Nampower, in its answering affidavit, has admitted to some allegations that during the tender process, mistakes were made but such mistakes should not be viewed as an indication that there was any bias in favour of Xaris Energy. Substantiated by various case laws, Nampower is however cognisant of the fact that the probability is high that the tender might be cancelled. However the court may rule otherwise and Nampower will await the decision of the court,” the letter which the Nampower board wrote to Kandjoze outlining potential damages the parastatal might face as a result of the cancellation of the Xaris power deal reads.
The Nampower board also informed Kandjoze that although Xaris Energy was appointed as the preferred bidder the awarding of the tender had never been formally communicated to them.
“This matter was deliberated by the Board of Directors, however, the resolution clearly indicates that the award would be subject to a number of conditions that were to be negotiated by the parties, which include inter alia the determination of risk allocations in the project documents, such as the PPA. This letter was however not finalised nor communicated to Xaris Energy due to the fact that the suspension of the project overtook the events. Our opinion is that Xaris Energy’s claims may best be limited to development costs incurred during the negotiation process (i.e professional fees paid to individuals present at meetings and negotiations were done by Nampower without the presence of any Xaris personnel, hence they will need to prove Nampower how they incurred such costs.) In the event Xaris Energy has incurred any capital expenses (manufacturing of turbines), this expense should be at their own risk as the final award letter was never finalised.”
Kandjoze, Tuesday said no Nampower board member had approached him about the fall-out in the board.
“No board member came to me and told me that,” he said. Nampower Company Secretary, Susan Mavulu instead of addressing questions posed to her chose to patronise the journalist and terminated the conversation after saying the reporter was wasting her time. Karuaihe- Martin said she couldn’t comment on the matter as she was in South Africa. Efforts to get comment from Nakale were futile as she was said to be locked up in a board meeting Tuesday. Her mobile was switched off.